In what may prove to be a painful admission in retrospect and an inadvertent green light for future bank runs, on Wednesday morning Italy's Cabinet Undersecretary Giancarlo Giorgetti said in an interview on Italy's RAI that Italian banks would need a "recapitalization" if the spread with German bonds continues to rise toward 400 basis points, from the current level of 314bps which is just shy of the widest level it has been going back to early 2013.

The last time "lo spread" hit 400 bps was in late 2012, around the time of Mario Draghi's legendary "whatever it takes" speech.

According to the Italian official, who is Deputy Prime Minister Matteo Salvini’s closest aide, bank assets would "automatically" suffer if the spread neared the 400-level and so as a consequence recapitalization would be needed. And since a recap for Italy's capital starved banks would likely entail balance sheet restructurings, accompanied by bail-ins of creditors and/or depositors, the closer "lo spread" got to the critical red line, the more likely Italian bank runs will become.

Said otherwise, the Italian population will now be even more focused on the spread of Italian bonds, and the higher it grows, the less comfort Italians will have with keeping their savings in local banks, and the more likely bank jogs (and then runs) will become.

Having thus set the bogey, Giorgetti then tried to assure the population that such a move would not be needed, as the government would be ready to intervene "immediately" if needed and "won’t wait months as Matteo Renzi’s government did with Monte dei Paschi" although as Berlusconi so fondly remembers, any attempts at intervention will ultimately end up futile if not backstopped by the ECB and/or Brussels.

Meanwhile, delivering a somewhat contrary message, Corriere della Sera reported that Italy's technocrat Finance Minister Giovanni Tria said that "we don’t want to wreck everything, we will follow attentively the market trend in the next few weeks." Tria also said that Italy must be ready to respond to financial markets, which in turn means that if the EU Commission wants to pressure Italy's populist government to fold on its demands for a 2.4% budget deficit - as it does - all it has to do is create some additional selling pressure on Italian bonds, especially now that Italy has admitted that a 400 bps spread in Italy-German bond yields is the potential "red line" for a bank run.

Confirming this, Tria also said that if the financial tension gets worse in the three weeks that the EU has given Italy to review its budget plan, "Tria is convinced that Italy will have to trim its deficit goals."

And while deputy PM Salvini reiterated that Italy will not change its budget, and Italy will not leave the euro or the EU, now that the bogey is set, expect Italian yields to surge in the coming weeks as the market makes it clear just how easy it will be to remove a cabinet that continues to defy Europe.